Taiwo Oyedele, the chairman of the presidential committee on fiscal policy and tax reforms, has raised concerns about Nigeria’s fiscal capacity and the implications of states collecting Value Added Tax (VAT). Speaking at an interactive session organized by the House of Representatives regarding tax reform bills, Oyedele highlighted that Nigeria’s budget is insufficient to support meaningful development.
He pointed out that Nigeria’s total budget for 2024, which includes the appropriation act and supplementary budget, is approximately N51.1 trillion (around $32 billion). This figure is notably lower than the budgets of other African nations, such as Kenya and South Africa, despite Nigeria’s larger population of over 200 million people. For comparison, Kenya’s budget is around $32 billion for a population of 54 million, while South Africa’s budget is about $130 billion for a population of just over 60 million.
Oyedele emphasized that Nigeria’s budget is “too small” to adequately fund necessary developments, particularly in critical areas like transportation. He argued that simply increasing the budget by a small percentage would not suffice, as the base is fundamentally inadequate for the country’s needs.
He also outlined Nigeria’s major revenue sources, which include personal income tax, property tax, stamp duties, and VAT, primarily controlled by the states. The federal government shares other revenue sources like corporate income tax, customs duties, and petroleum and solid minerals revenue with state and local governments.
Oyedele warned that if states were to collect VAT independently, it could lead to negative consequences for businesses and overall economic progress in Nigeria.
